States are free to authorize sports betting, Supreme Court rules

The Supreme Court on Monday opened the door to an unprecedented expansion of legalized betting on college and professional sports, striking down a federal law that forbade states from authorizing such gambling.

The decision set off a rush among states to put plans in place — a New Jersey racetrack said it would offer sports betting within weeks — and could revolutionize spectator sports, with some envisioning real-time wagering at baseball stadiums on whether the next pitch will produce a hit or an out.

Casino stocks soared, and team owners wondered about future profits and a new way for fans to experience their product.

“This is a new frontier for professional sports,” Washington Wizards and Capitals owner Ted Leonsis said in a statement. “And teams who don’t seize on this opportunity will be left behind.”

Officially, the sports leagues and the NCAA, which governs college sports, were less celebratory and more worried — about a hodgepodge of state regulations to deal with, for one thing, as well as a threat to the integrity of their sports if the explosion of gambling leads to scandal.

“The last thing the NCAA wants is anything that might lead to another point-shaving scandal like the one it experienced in 1951,” Charles Clotfelter, a Duke University professor of economics and law who has written about sports and universities, wrote in a statement. He was referring to a college basketball gambling scandal.

“The college sports business model depends on fans believing that unpaid players are motivated by the purest of competitive motives.”

The court’s 6-to-3 decision struck down the Professional and Amateur Sports Protection Act (PASPA), which Congress passed in the early 1990s to protect the integrity of sports, according to its sponsors. Only Nevada’s sports wagering industry was protected, and the measure said it was unlawful for other states to authorize such gambling.

But the court’s majority Monday said that violated states’ rights to make their own decisions, when Congress has not passed legislation to regulate an activity.

“The legalization of sports gambling requires an important policy choice, but the choice is not ours to make,” Justice Samuel A. Alito Jr. — coincidentally, the court’s preeminent baseball fan — wrote for the majority.

“Congress can regulate sports gambling directly, but if it elects not to do so, each state is free to act on its own.”

The majority’s rationale — that Congress may not commandeer states to “enact or enforce a federal regulatory program,” in Alito’s words — could resonate in other areas. Immigration laws and marijuana restrictions were issues raised in oral arguments.

Justices Ruth Bader Ginsburg and Sonia Sotomayor said the court majority “wields an ax” to strike down the law when a scalpel could have done the work.

Ginsburg said there is no doubt “that Congress has power to regulate gambling on a nationwide basis, authority Congress exercised in PASPA.” Justice Stephen G. Breyer agreed with them in part, though he also agreed with the majority that Congress exceeded its power in part of the law.

“Today’s ruling makes it possible for states and sovereign tribal nations to give Americans what they want: an open, transparent, and responsible market for sports betting,” American Gaming Association President Geoff Freeman said in a statement.

“Through smart, efficient regulation this new market will protect consumers, preserve the integrity of the games we love, empower law enforcement to fight illegal gambling, and generate new revenue for states, sporting bodies, broadcasters and many others,” he added.

The reaction from the National Football League was typical of those from sports organizations.

“Congress has long-recognized the potential harms posed by sports betting to the integrity of sporting contests and the public confidence in these events,” the league said in a statement, calling on lawmakers to pass a uniform national standard for sports betting. “We also will work closely with our clubs to ensure that any state efforts that move forward in the meantime protect our fans and the integrity of our game.”

Sen. Orrin G. Hatch (R-Utah) said he intends to file federal legislation soon, warning that the court’s decision could unleash “uneven enforcement and a patchwork race to the regulatory bottom.”

Still, after oral arguments revealed a majority of the justices to be skeptical of the law, the sports leagues began planning for such a decision. National Basketball Association Commissioner Adam Silver has floated the idea of his league taking a cut of the betting.

And Leonsis said betting is a natural outgrowth of the “data analytics” that motivate fans as well as sports organizations. Polls show that a majority of Americans support legal sports betting.

A report by the gaming industry suggested that up to 15 million Americans are active illegal bettors, Leonsis wrote in a blog post. “The appetite for sports betting is there, and now, instead of offshore bookmakers reaping the benefits, we have a pathway to bring this revenue into the US economy.”

New Jersey for years has tried to breathe new life into its troubled casinos and racetracks by authorizing sports betting at the facilities. PASPA allowed live betting on sports events only at facilities in Nevada, while a handful of other states have sports lotteries.

Former New Jersey governor Chris Christie (R) was a leader of the effort to authorize sports betting in his state. Current Gov. Phil Murphy (D) has continued the fight.

“I am thrilled to see the Supreme Court finally side with New Jersey and strike down the arbitrary ban on sports betting imposed by Congress decades ago,” Murphy said.

New Jersey voters in 2011 approved a referendum proposal to allow sports betting. Christie signed a law authorizing it and dared the federal government to “try to stop us.”

Courts did. They said New Jersey’s law violated a section of PASPA that forbids states to license and authorize sports betting. The Supreme Court decided not to review that ruling.

New Jersey tried a different tactic, taking advantage of a passing comment from the U.S. Court of Appeals for the 3rd Circuit. Although the state could not authorize sports betting, the court said, nothing in the federal law prevented the state from repealing statutes that imposed criminal penalties on the practice.

So New Jersey tried that, but lower courts said the state’s intention was the same prohibited activity.

Alito issued a strong statement objecting to the way Congress tried to outlaw sports betting — not by directly confronting the issue but by keeping states from passing laws authorizing such betting or getting rid of laws that prohibited it.

That violated states’ constitutional protections against being “commandeered” by Congress to do something, Alito said.

“It is as if federal officers were installed in state legislative chambers and were armed with the authority to stop legislators from voting on any offending proposals,” he wrote. “A more direct affront to state sovereignty is not easy to imagine.”